In a culture medium of Streptomyces caeruleus MTCC 6638 grown with p-coumaric acid (5 mM) as the sole source of carbon, co-production of caffeic acid and p-hydroxybenzoic acid was observed. Both caffeic acid and p-hydroxybenzoic acid are important phenolic compounds with pharmaceutical importance. These biotransformed products were identified by high-performance liquid chromatography and electrospray ionization mass spectrometry. Obtained data suggest that p-coumaric acid was possibly utilized by two different routes, resulting in the formation of a hydroxycinnamate and a hydroxybenzoate compound. However, higher concentration of p-coumaric acid (10 mM) favoured caffeic acid formation. Addition of 5 mM p-coumaric acid into S. caeruleus cultures pre-grown on minimal medium with 1.0 g/l glucose resulted in the production of 65 mg/l caffeic acid. Furthermore, S. caeruleus cells were able to produce the maximum amount of caffeic acid when pre-grown on nutrient broth for 16 h. Under this condition, the addition of 5 mM p-coumaric acid was sufficient for the S. caeruleus culture to produce 150 mg/l caffeic acid, with a molar yield of 16.6% after 96 h of incubation.